Foreign buyers looking to enter the Australian property market may finally have received some good news, with the South Australian government ruling out higher property taxes for foreign investors.
According to a report in the Australian Financial Review, South Australian treasurer Tom Koutsantonis has said today’s state budget will not include higher stamp duty or land tax that other states have announced.
In Victoria, foreign buyers of residential real estate now face an additional 7% stamp duty surcharge, while there land tax rate will rise from 0.5% to 1.5% for the 2017 land tax year.
In NSW, foreign investors will be hit with an extra 4% stamp duty surcharge from later this month, while the 2017 land tax year will bring an additional 0.75% surcharge.
In Queensland, foreign buyers will face an additional 3% stamp duty surcharge from October.
“I will not be doing anything that in any way hurts foreign property investors," Koutsantonis told the AFR.
“These types of taxes have no place in this country,” he said.
While the NSW government estimates it will generate an extra $1bn in revenue over four years through its tax rises, Koutsantonis said South Australia did not want to do anything that could jeopardise foreign buyer activity in the state.
"I want more foreign direct investment," Koutsantonis told the AFR.
"We're a trading nation, we're a trading state.”
While they may give up some revenue in the short term the move may be the right one, with Gavin Norris, head of Australia for Juwai.com, an online portal that markets real estate to Chinese buyers, believing states that don’t try to gouge foreign investors could likely see some benefits.
“The east coast states do run the risk that buyers will move to locations with more affordable property and less red tape, like South Australia, Tasmania and Western Australia,” Norris told Your Investment Property last month.
“This is certainly a great opportunity for agents and developers in those other states to more proactively make the case that their markets offer the same lifestyle at a better price,” he said.
Koutsantonis is far from alone in opposing the tax hikes, many lobby groups have criticised the moves and one real estate industry figure accused the NSW government of xenophobia over their plans.
“The government has found a scapegoat in foreign investors and is playing on xenophobia. They are choosing to single out Chinese investors when the real reason house prices are being pushed up is self-funded retirees who are purchasing properties for their super funds,” Malcolm Gunning, principal of Sydney based real estate agency Gunning, said.
“It is important to recognise that this is just a grab for cash from the government and a cop out. Foreign investors are an easy target and they aren’t going to continue to invest in Australia if the government makes it harder and harder for them,” Gunning said.
“They play an important role in the strength of construction industry and should be a welcome addition to this country. They are good for the economy and make a crucial contribution to our society.”
Koutsantonis’ announcement comes recently after he revealed the government would be extending and expanding a program offering stamp duty discounts to those who buy off-the-plan apartments.
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